Tennessee suppliers hope to benefit from new Volkswagen plant

Tuesday

Jun 30, 2009 at 12:01 AMJun 30, 2009 at 5:57 PM

Volkswagen's $1 billion plant in Chattanooga, now under construction, is expected to begin making a new sedan in 2011, and local suppliers are hoping to cash in by supplying parts and other services to the world's third largest automaker.

John Huotari

Volkswagen's $1 billion plant in Chattanooga, now under construction, is expected to begin making a new sedan in 2011, and local suppliers are hoping to cash in by supplying parts and other services to the world's third largest automaker.

The value of contracts to local suppliers could be worth hundreds of millions of dollars per year, said April Wortham, community relations specialist for Volkswagen Group of America Chattanooga Operations LLC.

At least one -- Dienamic Tooling Systems in Roane County -- is already doing business with Volkswagen's global operations, said Leslie Henderson, The Roane Alliance's president and chief executive officer.

On Monday, some of the suppliers met at Pellissippi State Technical Community College to hear a presentation on doing business with Volkswagen. The hour-long presentation and discussion was led by Thomas Van Loon-Behr, general manager for commodities purchasing of Volkswagen Group of America Chattanooga.

He gave a half-hour overview of Volkswagen, ranging from sales and history to worldwide operations and automotive brands, which include Audi, Bentley and Bugatti.

Volkswagen, established in 1949, plans to produce a new midsize sedan in Chattanooga, manufacturing 150,000 vehicles a year, Van Loon-Behr said.

The company hopes to triple its sales of Volkswagens in the United States by 2018 to 800,000 autos a year. The new sedan is expected to play a key role in the increased sales.

The new sedan has not yet been named but could compete with the Toyota Camry and Honda Accord.

Volkswagen's "requests for quotes" on parts are "peaking" right now, with about 50 to 60 packages out, Wortham said.

With proximity to Chattanooga considered a benefit, economic development officials say there are opportunities available for local companies, such as Tennessee Tool and Engineering, Protomet, Dynamic Tooling Systems, Aisin Automotive Casting Tennessee, SL Tennessee, Mag USA and Eagle Bend Manufacturing, as well as small tooling companies. Other companies could move into the area to be closer to VW, the officials said.

"We just have to make sure we take advantage of that," said Kim Denton, Oak Ridge Economic Partnership president.

Some of the companies had representatives at Monday's presentation, where they were encouraged to register at www.vwgroupsupply.com, in order to possibly become a supplier.

"It may not happen, but it's at least worth looking into," said Tim Thompson, Anderson County Economic Development Association president.

Wortham said $270 million worth of contracts, including contracts for construction of the Chattanooga plant, have already been awarded to companies in and around Chattanooga.

The Volkswagen Group sold 6.3 million vehicles in 2008, coming in third behind Toyota and General Motors, Van Loon-Behr said.

The company, which has production locations across the world, has 328,000 employees.

About 125 people attended Monday's presentation. Those invited included automotive parts suppliers from a 15-county region, as well as county mayors and members of the economic development community, according to information from the East Tennessee Economic Development Agency.